Namibia’s downgrade: NGOs hopeful, but ease of borrowing not guaranteed

Namibia’s reclassification by the World Bank from an upper-middle-income to a lower-middle-income country could open doors for non-governmental organisations (NGOs) previously sidelined by the country's former economic status, but economists warned that the reclassification does not automatically open access to concessional loans from global lenders.The World Bank’s 2025/26 income classification update, effective from 1 July, downgraded Namibia after its Atlas Gross National Income (GNI) per capita fell from US$4 870 in 2023 to US$4 240 in 2024 - below the US$4 495 threshold for upper-middle-income economies.According to Philippe Talavera, director of the Ombetja Yehinga Organisation (OYO), the previous income status made it difficult for local NGOs to attract international funding.“When Namibia was classified as an upper-middle-income country, some partners and donors stopped operating in Namibia,” Talavera told NMH. “Namibia was no longer a priority because they were focusing on lower-middle-income countries.”He said the main consequence was exclusion from international calls for proposals, which made fundraising significantly more difficult. “This new reclassification might have the opposite effect. It might allow some partners who previously couldn’t work in Namibia to return,” he noted.Talavera cautioned, however, that change may not be immediate. “If we expand the landscape of potential donors, it will mean more opportunities for NGOs and hopefully more impactful activities on the ground,” he said.No shortcut to soft loansWhile the downgrade may benefit civil society, economists have urged caution about interpreting it as a broader economic gain. Tannan Groenewald, an economist familiar with Namibia’s debt portfolio, said the reclassification does not automatically open access to concessional loans from global lenders.“Namibia is not currently within the eligibility threshold for IDA [International Development Association] support,” he explained. “Eligibility depends on GNI per capita being below US$1 335. While the downgrade places Namibia in the lower-middle-income group, it is still above the IDA line.”Nonetheless, Namibia may qualify for blended financing - a mix of concessional and non-concessional funding - due to weak macroeconomic indicators such as high unemployment, deteriorating infrastructure, and low growth. The World Bank has already assigned Namibia to its lowest IBRD pricing tier (Group A), a category typically reserved for fragile and conflict-affected states.Groenewald pointed out that despite discussions about external funding, Namibia’s debt burden remains largely domestic. As of March 2025, domestic debt accounted for 77.5% of the total, with just 8.3% linked to its Eurobond, which matures in October.“Debt servicing is largely influenced by domestic factors, including the fiscal deficit, inflation, and economic growth,” he said.He also dismissed fears that the downgrade would scare off investors. “Investors do not make decisions based on World Bank classifications alone. They conduct their own analysis and are already aware of Namibia’s structural weaknesses.”According to Groenewald, Namibia’s downgrade simply reflects realities long visible to investors. “This is not a sudden shift. The country has been misaligned with its upper-middle-income status for years.”A warning, not a winDespite the potential for improved donor funding, Groenewald warned against viewing the downgrade as a positive development.“Policymakers should not see this as a ‘win’,” he said. “It is a warning sign that Namibia needs deep fiscal and economic policy reform.”He also warned that increasing reliance on aid risks creating a dependence trap. “The focus should be on self-sufficiency: improving public finance efficiency, labour reforms, and productivity growth.”The downgrade has also sparked renewed scrutiny of Namibia’s long-term development strategies, particularly Vision 2030.“This is a wake-up call. A decade of declining GNI per capita shows that conditions have worsened for the average person. Vision is not execution, and the indicators prove it,” Groenewald remarked.

Namibia’s downgrade: NGOs hopeful, but ease of borrowing not guaranteed

Comments

Namibian Sun 2025-07-07

Please login to leave a comment

Namibia’s downgrade: NGOs hopeful, but ease of borrowing not guaranteed

Comments

Namibian Sun 2025-07-07

Please login to leave a comment

Login